Not only inflation, many factors behind rise in GST
NEW DELHI: As the monthly GST collections surged past `2 lakh crore in April, the debate is over the reason for buoyancy seen in GST collections in the last few years with many attributing it more to the inflation than increased economic activities.
An analysis by The New Indian Express and its interaction with economists show inflation alone can’t be attributed for growth of GST over the years. Growth in GST is mainly due to improved compliance, plugging of loopholes used for evading taxes and improved economic activities. Inflation helps in better tax collection, but in 2023-24, the impact of it was subdued.
The analysis shows gross GST collections rose by 11.65% in FY24, but after adjusting for inflation (arrived through GDP deflator) the growth comes down to 10.28%. In FY23, the impact of inflation is more prominent on GST growth as inflation-adjusted growth in GST was 15.12% against 21.9% without inflation.
